Ronnie Dick to join Dresdner Kleinwort! Never let it be said that we do not bring you the inside story first. Ronnie remains the best FRN trader in the market by a wide margin. When PaineWebber succumbed to the overwhelming advances of UBS Warburg behind a bush in Central Park, it was clear to his fan club that Ronnie would not want to be a cog in the engine of the lumbering UBS Warburg steamroller. Having made a serious fortune at Kidder Peabody and then at PaineWebber, the world was his oyster. But at 44 Ronnie decided that it was too early for retirement. There were offers galore. Merrill Lynch should have pounced and Lehman Brothers, whose FRN train seems to have been derailed, should have sent Ronnie a blank cheque and asked him to fill in the amount. Goldman Sachs, which has suffered the embarrassment of falling behind BNP Paribas in FRNs, missed another golden opportunity. However, that has been the story of Goldman's life this year in debt capital markets. The appointment of Dick to a very senior trading position is a coup for Dresdner Kleinwort Benson, where Andrew Pisker is now well on his way to building an 'A' team of exceptionally talented managers. Dresdner may not be an FRN powerhouse (it is lying in ninth place in the EuroWeek league tables) but Pisker will be hoping to increase both primary and secondary market share with Dick's arrival. Dick's friend and former FRN trading colleague from PaineWebber, Andy Slaughter, is already at DKB and our top Swiss mole, the legendary Frau Brünhilde Grössrosti, says that DKB is also about to snap up several of the best PW salesmen in Switzerland. Will this number include the famous veteran, Jules Weinberger? Brünhilde has promised to keep us informed and, in the meantime, we wish Ronnie every success in his new career. While on the subject of the last mortal remains of PaineWebber, we were correct in our report that Mike O'Hanlon's band of PW waifs and strays had been turned away by Nomura. This is most uncharitable, especially as Christmas is coming and this should be a time of peace and goodwill to all men. Rather than ringing the Red Cross to find them a good home, will some kind house take them in? Just in case you did not know, they are actually rather good. We visited Lille in France last week for an opening round of Christmas shopping. The French are charming, the women are stunning and the hotel staff treat us like royalty - is it just the Parisians who are grumpy? French television was all at sea over the US election and we were reduced to watching the BBC World News. Which is the more boring: BBC World News or CNN? Answers please on the pillow where you would have fallen asleep. One of our highly placed inside moles at Morgan Stanley called us in Lille with some news. First, the shares of lastminute.com had tumbled below 100p, causing the firm no end of embarrassment. Were we short of lastminute? Because if we were we could probably finance an extra two days' shopping. lastminute was one of Mary Meeker's promotions, and hadn't we been saying that the only smiling faces at Stanley these days were those short sellers of Mary's recommended internet stocks? How very unfair that is on the former queen of the internet whose personal earnings last year were in excess of $15m, but may only be a fraction of that amount when they hand out the bonus cheques in the new year. No, we are not short of lastminute or any other of Ms Meeker's 'stocks of the day'. We do not try to second guess the likes of Ms Meeker, who is far smarter than ourselves and has just been going through a fuzzy patch recently with her crystal ball. lastminute.com always looked like one puff of hot air too many, but Morgan Stanley did decide to raise the issue price by a silly amount which is why some blinkered spoil-sport institutions are baying for blood. However, we do not attach any particular blame to Mary, who probably just had a bad hair day, and anyway, hasn't lastminute still performed better than Goldman's super-flop World Online? Just to make sure that Mary Meeker does not feel dispirited in her work, we will send her a card and a pair of her favourite Wal-Mart trainers to put in her Christmas stocking. The second news flash from Morgan Stanley concerned Barton Biggs, the firm's global asset allocation guru who must have earned sufficient airmiles to buy his own Boeing 747. Because Barton does so much travelling, he is known affectionately behind his back as Biggles. Our highly placed Stanley source says that the rumour mill in New York is suggesting that Biggles owns more stock in Morgan Stanley than anyone else and that the value of his holding was close to $1bn before the firm's stock slipped badly on a banana skin. Can this be true? We had always assumed that John Mack was at the top of the Stanley Christmas tree, or the lanky Phil Purcell, who was supposed to last less than a year but is still there and smiling like a Cheshire cat with nine lives. Our pals at Morgan Stanley say that the boys who really landed with their bums in the proverbial butter were those who were given a bundle of shares when the firm first went public in 1986. If you had been on the receiving end of a large wedge of stock in the IPO; had not sold a single share, and had been clever enough to reinvest the dividend streams in more stock, it might be possible to arrive at a figure today close to $1bn. Because Biggles has been a high flier in every sense for so many years, he is obviously a very wealthy man indeed. We ourselves believe that Mr Biggles is worth every cent and we were surprised by the comment of one leading fund manager in London who told us: "Barton is a delightful individual, but, taken over the past 15 years, hasn't he been wrong more times than right?" Shame on you, sir. But if Mr Biggles is really worth close to $1bn, we suspect that he doesn't really care. When Rabobank and DG Bank first announced plans to merge their investment banking activities one year ago, we did not know whether to laugh or cry. In the end we pooh-poohed the idea to such an extent that friends in Holland asked us why we were being so spiteful to their nice farming friends at Rabobank. When we then had the temerity to call the proposed venture the Rabid Dog Bank we were informed that we had been officially excommunicated by the Rabobank senior management and that our cards had been marked by the Dutch customs and immigration. Occasionally you have to be cruel to be kind, and we were only trying to warn the homespun folk at Rabobank about the old saying, "once bitten, twice shy". After all, hadn't Rabobank just fallen flat on its face when it tried to gatecrash the big Euromarket party in London? You may recall that the cash rich Rabobank, with its AAA credit rating emblazoned on its battle standards, tried to take the City of London by storm. Money was no object; watertight contracts of three years were being spread around like confetti, and the word on the street was that the orders from Rabobank's dreary HQ in Utrecht was to point a lance firmly at ABN Amro's Euromarket duff and charge. National pride was involved and Rabobank was going to plant a Dutch tulip on the top of every Euromarket summit. Of course the greedy London headhunters salivated at the prospect of almost limitless fees, and as one of the most aggressive said to us: "Never have I made so much money for supplying basically unwanted or shop-soiled goods." That was indeed Rabobank's problem. The Dutch paid too much for too little intellect in return. Rabobank hired everyone else's rejects plus any waifs and strays who happened to be passing the front door. The inevitable result was tears, sick and substantial losses. When Rabobank therefore announced that it wanted to mount a second Charge of the Light Brigade in conjunction with itsy-bitsy DG Bank, we were the first to shout: "Hold back those horses." Two nice, but basically unexciting, European financial institutions just do not make a premier division bank, let alone a contender for the World Cup. Were we correct to sound a note of warning? Occasionally we get lucky and before the two banks had drawn up the second draft proposal, whole teams of managers from Rabobank had fled for the nearest exit. From the outset, it was clear that this was never going to be a marriage made in heaven. Now the two banks have abandoned all pretences of walking up the aisle. We are not at all surprised and can only ask why this farce was allowed to continue for so long. Once again, the only winners are the lawyers and the avaricious headhunters who have been picking off the few able executives in either bank as soon as they put their heads above the parapet. Rabobank chairman Hans Smits is, by all accounts, a totally decent and honourable fellow, and he should be counting his blessings at the same time as sending back the church flowers and the wedding presents. The bride could not bring very much to the Dutch table as DG is something of a dog's dinner itself - no pun intended. Hansie Smits should buy himself a nice clean drawing board plus a sharp pencil for Christmas and start all over again. There are strategic alliances to be made, but if he really wants Rabobank to have another stab at investment banking it is better to have someone more experienced holding your hand when you step out to cross that dangerous road. One wrong move and you are a bulldozed hedgehog all over again. Ages ago we recommended in these columns that Rabobank strike a deal with Paribas. What a combination that would have made, but then the French banks started to dance around each other's handbags like a gaggle of well endowed Essex girls on a Saturday night. Paribas was finally forced to succumb to the unwanted advances of BNP in the back of a Citroën Deux Chevaux and a golden opportunity was lost. Instead of DG Bank, which is fog bound in Germany, Hansie Smits should be looking at the possibility of asking help from Dresdner Kleinwort Wasserstein, a house which really does know about international investment banking and which wishes to spread its wings. Our thanks to Merrill Lynch on two separate counts. First, for arranging a one-on-one meeting with David Komansky, their chairman and chief executive, on a recent brief visit to London. Were we really the only scribblers apart from the Financial Times to be invited to meet the great man? Second, for another invitation to a year end awards dinner which reminds guests more and more of a Democratic or Republican National Convention - we have never minded about the hype as long as there are lines of long-legged cheerleaders. Also, with Merrill Lynch currently quoted at 6-4 on to win the primary international league tables for the seventh consecutive year, how could we refuse? Our conversation with David Komansky was off the record but it is always enjoyable to meet a man who is the main claimant to be the current King of Wall Street - Goldman's Hank Paulson just doesn't look like a king. We did not draw breath for an hour and Komansky, who never fails to call a spade a spade, is not only knowledgeable on almost every subject, but wonderfully entertaining. Usually the chairmen of major Wall Street houses bang their own drum and repeat "I am the greatest" more times than the early Cassius Clay. There is no doubting Komansky's pride in Merrill Lynch's achievements but he also knows precisely in which sectors the firm should and could be performing better. Employees should be aware that he is looking over every senior manager's shoulder. The good news is that he is essentially optimistic for the industry and for markets. Even better news for Merrill shareholders, whose interests are always at the top of his agenda, is that he is not due to retire for at least another two years. Because ours was a private meeting we will reveal no more than Mr Komansky's wish that, in a perfect world, he would prefer to hand over an independent Merrill Lynch to his successor. However, that does not mean that Merrill itself would not make more acquisitions and, as regards the name of his successor, he would say no more than that it was unlikely that the board would need to look outside the main candidates within Merrill Lynch. From Frankfurt we hear once again from our favourite local informant, Heidi von Grippenutz. The delightful but extremely stern Heidi is now almost a national icon and she has high hopes of financial fame and fortune when she floats the Von Grippenutz Schools of Correction on the Neuer Market. Her clients cannot wait to buy some shares and as she correctly says: "In German banking anything goes as long as it is painful for shareholders." How very profound. Heidi says that it has generally been an annus horribilis for German banking. The only exceptions are Josef Ackermann, who is the hero of the hour, and Edson Mitchell who stands to collect a bonus of around $15m, assuming that Deutsche does not tread on a slippery last minute whoopsy or reveal some unexpected bond losses. Other German banking combatants who receive a favourable mention in dispatches are Leonhard Fischer and Tim Shacklock at Dresdner Kleinwort, who succeeded in snaring the elusive Wasserstein & Perella. This was not only an inspired coup but proved beyond question that some German banks are not all mouth and trousers, and at least one can actually close a deal as well as the bathroom door. However, not on the awards list was Martin Kohlhaussen who has produced enough hot air this year to power a fleet of Zeppelins. Without the earning contribution from Mehmet Dalman's Commerzbank Securities, the word among the Frankfurt bars and speakeasies is that the parent bank's shares would be trading below Eu25 - now that really would cause heart flutters among the predator Cobra Group where supremo Hansgeorg Hofmann must be licking his wounds, lighting candles in churches and praying for a miracle. Our early guesses for German banking next year are that the Commerzbank situation will unravel, that US financial institution will try to poach the whole of Mehmet Dalman's team at Commerzbank Securities and that Deutsche and Dresdner will both make significant acquisitions - but please, please, not another doomed merger attempt between the two. The news that WestLB may be chopped in half has delighted the Frankfurt banking community who have been jumping up and down for years protesting that WestLB has a totally unfair cost of funding advantage. Of course they are absolutely right, but let us be frank and admit that the management of the bank has been so erratic and uninspiring that without the funding advantage WestLB could have easily disappeared quietly down a local disused mineshaft. If you really know your North Rhine-Westphalia banking onions and bratwurst slices, you would appreciate that WestLB has been a safe haven for discarded local politicians offering well paid "jobs for the boys" with lots of lovely perks. We ourselves have nothing against privileged status for those with some local influence, especially if there is a warm highly remunerated chair for ourselves at the head table. We are firm believers in the old adage that Christmas always comes early for those with friends in high places. Just because we have not had the pleasure of meeting WestLB chairman Friedel Neuber or the nearly invisible Gerhard Roggemann, who runs the international division, doesn't mean to say that we are not committed members of the bank's fan club. Didn't we champion the WestLB purchase of Bernie Ecclestone's Formula One bonds which no one else would touch with an oily rag? Didn't we praise the brilliant role of securitisation belle of the ball Ms Robin Saunders who can wrap up a collateralised deal faster than the Harrods gift department? When the whole world was saying that Bernie Ecclescake's F1 bonds might run out of fuel on the fifth lap, there was the clever Robin Saunders hauling in every F1 bond as if she was spinning for mackerel off the Isle of Wight. But the enchanting Ms Saunders knew the difference between the smell of high octane fuel and old mackerel. With WestLB's bungalow level cost of funding, the bank has made a fortune out of the Bernie Ecclescake bonds and we only wish that we owned some ourselves. Ms Saunders should be created Queen of North Rhine-Westphalia and given a bonus of a 1% spread between WestLB's funding costs and Bernie's Libor - plus a stream of interest payments. This bonus would enable the alluring Robin to buy a large chunk of downtown Düsseldorf - if indeed you can find anyone who wants to live in downtown Düsseldorf, where the nightlife is said to be less exciting than in uptown Minsk or mid-town Auckland. Ms Saunders' latest coup for WestLB is to buy Pubmaster, a chain of boozers. We wouldn't go near one of their establishments, but we are told that Pubmaster customers are not very fussy about their surroundings. But Ms Saunders is so clever that she will be able to turn ullage into Premier Cru Bordeaux and Gertie Roggemann's star in the bank will rise even further. Do you remember the days when the socially superior House of Lazard kept itself to itself and only occasionally deigned to raise a royal hand to the public? The partners at Cazenove also took the same approach and didn't it work like a dream? As essentially private partnerships, there was no requirement for a public "need to know". In the end, the public were told nothing and were quite content. But how times have changed for the mighty House of Lazard. Not only is the bank's name being splashed all over the tabloids, but the contents of its laundry basket are being hung out in public for all to see. We strongly suspect that the late, great André Meyer will be turning over in his grave. Will all of this unwelcome attention result in an outright sale of the last grand private investment bank, whose deal making skills are part of financial folklore? At 67 years of age, the chairman, Michel David-Weill, still looks in his prime, and he is smart enough and rich enough to see off most of the barbarians knocking on his gates. But underneath the £3,000 Savile Row suits and the polished veneer, there is more jockeying for position at Lazards than at the start of the Grand National. Gentlemen to the core they may be, but just below the surface the Lazard partners and directors are as anxious to make as much money for themselves as the former partners of the old Salomon Brothers in the greediest days. You didn't think that Lazards partners cared about money just because most of them are already very rich in their own right? You would be wrong. Mr David-Weill and his family may take $100m a year out of the firm but many top Lazard executives consider that they are underpaid. Even some of the best have to struggle by on the equivalent of $2m a year, which may seem like a reasonable wedge to you but in reality is about the same as a thrusting 28 year old Goldman Sachs vice president in a good year. No wonder that some of the Lazard natives have been getting restless, and that others have already jumped over the wire and headed to greener pastures. The news that Mr David-Weill will appoint an American, Bill Loomis, to be Lazards' next chief executive, will only set more fur flying within the bank. The aristocratic French partners will have had to reach for the smelling salts before retiring to their vast country estates. An Englishman might have been almost acceptable. But an American - merde! We do not know much about Willie Loomis except that he is 6' 4", Ivy League to the tips of his handmade Lobb shoes and smoother than George Hamilton or Pierce Brosnan. We have no doubt that he has a devoted following among the Lazard gals but if our memory isn't becoming befuddled by a claret over-indulgence in Lille, wasn't Billy semi-exiled from New York and sent to mingle with the Silicon Valley flakes and weirdoes in California? As Lazard is not exactly noted for high tech expertise like Frank Quattrone of CSFB, a posting to California for Billy looked like the equivalent of winning summer hols in Death Valley. However, the climate obviously suited Mr Loomis, and it may also have helped that he is one of Mr David-Weill's most loyal friends. Has this put anyone's nose out of joint in London, where the super-slick combination of David Verey and Marcus Agius might have been well backed as the best hands to take over the Lazard tiller? We may never know the answer - Messrs Verey and Agius are about as communicative with the press as the Sphinx. Do you also sense that the good ship Credit Suisse First Boston has sprung a leak? Does anyone on the command bridge know? Should we send a Mayday message to Admiral Allen Wheat in New York - actually the great man has been trying to rally his flagging troops at a rundown offsite venue in Florida. Should Admiral Wheaty put the lifeboat crews on stand-by? CSFB's acquisition of DLJ (Lehman was also trying to get its hands on the juiciest and most sensitive parts of DLJ) may prove to be a winner in the long term, but in the meantime it is hitting submerged rocks every other day. The defections of DLJ line managers, who seem to want to work for any other house apart from CSFB, began as a leak - but is now threatening to turn into a flood. Admiral Wheaty must be asking himself down in sunny Florida just why DLJ managers are fleeing to Salomon Smith Barney, Lehman Brothers and even to Bear Stearns? Does CSFB have a problem which requires a whisper in the ear from a best friend? Mr Wheat should be concerned by the suggestion from a former CSFB colleague who told us: "Perhaps Allen should post up a notice with the names of those who have decided to stay, as a full list of those who have chosen to leave might be exorbitantly expensive to print." While we instantly rebuked Mr Wheat's pal for such an outrageous and unnecessary remark, he thought that he was being very amusing. We believe that such comedy should be confined to suburban music halls.
November 17, 2000
